Much has been made about rising consumer confidence, the record high stock market, and the housing recovery. The main stream cheerleaders tout these numbers like the band on the deck of the Titanic playing upbeat music ignoring what is lurking under the surface.
A friendly reminder, the Great Recession ended four years ago the end of this month, but the final GDP growth rate for Q1 was adjusted down to 2.4% extending the longest stretch of sub 3% GDP growth since 1929.
Yet the cheerleaders continue to report positive ‘growth’, not as fast as we would like but growth. After all Obama had to deal with the worst financial collapse since the Depression. And the band played on.
Let’s look under the surface of the Obama recovery shall we?
What could be the reason consumers would gain confidence? Increased disposable income? That can’t be the reason because the BLS reported this week labor costs plunged 4.3%. A record decline on a stunning 3.8% drop in hourly wages, and a 6.9% decline in manufacturing pay.
The rise in confidence must be coming from falling prices then if real income is headed south. Beef prices? Record high and climbing. Gas? National average of $3.62 up only 3 cents from last year but 10 cents the past month. The winner is the Midwest with gas soaring past $4.00 a gallon in Indiana and feckless Illinois.
Perhaps the answer can be found in this Bloomberg poll taken May 31-June 3:
Followed by this ditty:
Asked about events in the U.S., 60 percent say the country is on the wrong track, while just 32 percent say things are headed in the right direction.
This is where I will give up trying to understand why consumer confidence is up.
How about that record high stock market? After the bad news on manufacturing the market rallied early in the week with analysts saying bad news is good news because that means Bernanke won’t slow easing. Sugar high from Sugar Daddy?
Then something happened and the market dipped below 15,000 with an over 200 point drop on Wednesday. We’ll see if any major players buy into the dip. Probably if they get a note from Bernanke.
(An important interview) Saving the Net from the surveillance state (And Crony Media): Glenn Greenwald speaks up (Q&A) | Nick Sorrentino